charges, fees, interest receipts and dividends. Mathematically, the subsidy (S) in a service is obtained by: S = RX + (d + i) K + i ( Z + L ) - ( RR + I + D ) Where: RX = revenue expenditure on the service L = sum of loans advanced for the service at the beginning of the period K = sum of capital expenditure on the service excluding equity investment at the beginning of the period. Z = sum of equity and loans advanced to public enterprises classified within the service category at the beginning of the period. RR = revenue receipts from the service I + D = interest, dividend and other revenue receipts from public enterprises falling within the service category. d = depreciation rate i = interest rate Services provided by the govt are grouped under the broad categories of general, social and economic services. General services consist of i) organs of state ii) fiscal services iii) administrative services iv) defence services, and v) miscellaneous services. These services can be taken as public goods because they satisfy, in general, the criteria of non-rival consumption and non-excludability. The entitlement to these services is common to all citizens. Since they are to be treated as public goods, they are assumed to be financed through taxes. Important service categories in social services are i) education consisting of general education, technical education, sports and youth services, and art and culture, ii) health and family welfare, iii) water supply, sanitation, housing and urban development, iv) information and broadcasting, v) labour and employment and vi) social welfare and nutrition. Under the heading of economics services, the following are included i) agriculture and allied activities, ii) rural development, iii) special area programmes, iv) irrigation and flood control, v)energy, vi) industry and minerals, vii) transport, viii) communications, ix) science technology and environment and x)general economic services. In the estimation of subsidies these governmental services are divided into three groups: Group1: all general services, secretariat expenses in social and economics services, and expenditure on natural calamities are included in this subgroup. Being public goods, these are financed out of taxation and are therefore not included in the estimation of subsidies. Group 2: it consists of services with strong externalities associated with them. In the case of these services, it is arguable that even though the exclusion may be possible, these ought to